Federal banking regulators recently announced a new mortgage foreclosure settlement to replace a 2011 settlement between the regulators and certain home loan servicers. Lenders participating in this new settlement, including Bank of America, Citigroup, Wells Fargo, JPMorgan Chase, MetLife Bank, PNC, Sovereign, Sun Trust, U.S. Bank and Aurora, have agreed to distribute $8.5 billion to settle complaints alleging that some homeowners were improperly foreclosed upon. A portion of the settlement, in the amount of $5.2 billion, will be provided to certain borrowers in the form of loan modifications, forgiveness of deficiency judgments and other relief, while the balance of the settlement will be paid directly to other eligible borrowers.

The Bank of America Cooperative Short Sale Program may be able to help homeowners complete a short sale if they owe more on their mortgage than their house is worth and do not qualify for the Home Affordable Foreclosure Alternatives (HAFA) short sale program. This program can streamline the approval process and offers financial assistance to help homeowners with relocation and moving expenses.

The United States Senate and House have passed the 2013 American Tax Payer Relief Act; extending the Mortgage Forgiveness Debt Relief Act (MFDRA) until January 1, 2014.

The Long and the Short of the Tax Impact of Short Sales

In today’s economy buyers often require additional time to qualify for necessary financing, due to impaired credit, and sellers often require additional time to complete negotiations with their lender in the context of a short sale. Lease Option or Lease Purchase Agreements, commonly referred to as “Lease-to-Own” Agreements and mistakenly used interchangeably, are agreements which allow a potential buyer to occupy the seller’s property for a period of time before completing the sale. This arrangement can assist either or both parties in meeting their goals and needs with respect to the transaction and their specific circumstances. In some instances, these agreements may even allow a buyer the opportunity to build a bit of equity in the home as well.

It is important to understand the distinction between a Lease Option Agreement (“Lease Option”) and a Lease Purchase Agreement (“Lease Purchase”), however. A Lease Purchase consists of two separate contracts: 1) the residential lease which provides for the tenant-buyer’s lease of the property for a specified term; and 2) the contract for sale which obligates each party to the typical terms of a residential purchase agreement upon the expiration of the specified lease term. Typically this kind of agreement provides what are referred to as cross-default provisions to ensure that a breach of one of the agreements will result in an automatic breach of the other. As the tenant-buyer has contracted to purchase the property in the context of a Lease Purchase, oftentimes the lease will provide that the tenant-buyer is responsible for maintenance and repairs which are typically the duty of the landlord.

It is the dream of every American to own a home someday; for many this dream becomes a complete nightmare. In today's economic climate, homeowners continue to lose their property to foreclosure. As if this weren’t painful and embarrassing enough, the lender can still come after them for the deficiency balance after they foreclose on the home.

A deficiency balance in a mortgage foreclosure is the difference between the outstanding balance due on the loan and the fair market value of the property on the date of the foreclosure sale. For example, if the balance of the mortgage is $200,000 and the fair market value is $130,000, the resulting deficiency would be $70,000. Note that the deficiency is based on the fair market value, not on the ultimate sales price of the home. If the lender sells the same foreclosed home for $100,000, and the fair market is $130,000, the deficiency is $70,000, not $100,000.

Florida’s Uniform Electronic Transactions Act has made it possible to create a real estate contract by way of electronic communication. A valid offer, acceptance and consideration must be present, however, to create such contract.

Agents should be mindful of what they are stating in their email communications when negotiating a real estate transaction. Florida’s statute of frauds requires contracts transferring interests in real property be in writing and signed by the party to be charged. Although one might automatically assume the words “signature” or “signed” contemplate an ink signature, adoption of the Uniform Electronic Transaction Act (UETA) by Florida, has broadened the scope of such terms to include markings, symbols, or even sounds which are intended to serve as a party’s signature to an agreement.

Buyers seeking to purchase property at foreclosure sale face the potential threat of title issues, as title to real property which has made its way through the foreclosure process may be invalid, clouded or subject to certain liens.

Certain errors or omissions in the foreclosure action may render a foreclosure judgment void and result in title of the foreclosure property reverting back to the former homeowner. Some of the most prevalent errors affecting foreclosure properties include insufficient notice, incorrect legal descriptions in the mortgage and/or foreclosure documents, and competing claims on the part of lenders as to ownership of the mortgage debt.

A quit claim deed, sometimes incorrectly referred to as a quick-claim deed, is a legal document that transfers the owners interest (the grantor) in real property, to a new owner (the grantee). The grantor thus quits his right to the property. Hence the name; quit claim deed.

Pursuant to Florida Statute Section 201.02, a documentary stamp tax is imposed on all documents that transfer interest in Florida real property. Examples of document that may transfer interest in real property include: warranty deeds, deeds in lieu of foreclosure, and quit claim deeds.